As the health insurance industry reduces their health provider reimbursement rates to improve profitability and growth, today's health care industry, linked into that very system, needs growth in their revenue and return.
To this point, it is important that physicians, hospitals health care service businesses and related companies (herein “health providers”), identify and capitalize on all opportunities to maximize compensation from services provided to their respective patients.
Normally, when a patient receives treatment and/or services from a health provider, either the patient and/or their health insurance company, if applicable, may be billed; subsequently, the patient and/or their insurance has the responsibility to pay the health provider for the rendering of these services.
When the patient has health insurance, the health provider that contracts with the patient's health insurance company has the obligation to accept contracted reimbursement rates from the patient's health insurance; these contracted rates may typically be lower than the health provider's normal, full charges for their billed services.
The patient who does not have health insurance is known as a self-pay patient; in turn, the health provider does not have an obligation to reduce their fees and can bill the patient at their normal, full rates. However, many self-pay patients cannot afford normal health provider fees and thus take on additional medical-related debt. This may result in the health provider deciding to write off a portion of their bill. This is a common practice in hospitals, lower income communities and the like.
However, in certain patient financial circumstances there may exist a responsible payment party, which is not health insurance, yet constitutes a payment source for the provision of paying the health provider's bills. The responsible payment party may be financially responsible for the individual, group or business entity, deemed to have caused the injuries or health problems (herein “tortfeasor”), relating to the patient's need and receipt of injury-related health care services. Additionally, some responsible payment parties are solely responsible for the patient and their injuries.
Such cases for responsible payment party involvement may represent but not be specifically limited to patients seeking care from injuries stemming from assault, battery, infliction of mental distress, medical-malpractice, environmental causes, personal injury, motor vehicle accidents, pharmaceutical liability, poisoning, toxicity, slips and falls, product liability and many others.
Within many state laws, there exists a provision known as the Collateral Source Rule. This is a common law rule of evidence, which allows a patient who has been injured (herein “injured party”) and/or their legal representative (i.e. attorney) where applicable, to submit health provider bills to, and receive compensation from responsible payment parties, including but not limited to first party health riders and/or third party liability insurance payers—at full fee amounts of compensation, if applicable, with either or both. A first party payer may be the injured party's own medical benefits/payments rider on their own auto policy but may also include similar first party medical payment riders on non-auto policies as well.
It is important to note that even if the health provider's bills were previously paid by the patient's health insurance company, the responsible payment party is in most cases, cannot waive their obligation to pay the submitted medical billings, if the billings constitute part of an injury claim.
The payment to the injured party from a first and/or third party payer may be duplicative or higher in amount than what the Health provider receives from the patient/injured party's health insurance or through a reduced-fee arrangement with a self-pay patient.
Furthermore, when an injured party and/or their attorney files a claim against a tortfeasor and/or their representing third party liability insurance, the financial valuation of the injury claim may derive part or much of its value from utilizing a multiple of the actual injured party's medical services rendered and bills thereby related.
This is important in that health providers are typically, not contracted with first and/or third party payers; thereby not necessarily limiting compensation as is the case with health insurance contracts. Moreover, this may allow the health provider a better opportunity to receive full fee compensation for the provision of their health care services, a benefit not typically realized by the health provider.
When a patient visits a health provider, the applicability and disclosure of a first and/or third party responsible payer may not always be apparent to either the patient and the health provider, or both. Therefore, there exists a problem with the identification, timely knowledge, subsequent billing of, and a patient's future collection from situations where there is an applicable first and/or third party payers, who have been submitted health provider billings by the patient or their legal representative.
When patients who are injured parties, file a claim against tortfeasors and/or their responsible payers, wherein their financial compensation comes in part from utilizing medical billings, the health providers themselves may lose an opportunity to be compensated at their normal fee rate.
These and other drawbacks exist with known billing practices.